Close

Form 8-K SUNPOWER CORP For: Aug 05

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/23/2024

1. TSLA
2. GM
3. SPY
4. SPOT
5. SHW
6. AMZN
7. AAPL
8. NVDA
9. MTTR
10. MINN


August 9, 2016 4:05 PM EDT


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2016
 
 
SunPower Corporation
(Exact name of registrant as specified in its charter)

 
 
001-34166
(Commission File Number)
 
Delaware
94-3008969
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)

77 Rio Robles, San Jose, California 95134
(Address of principal executive offices, with zip code)

(408) 240-5500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 






Item 2.02.
Results of Operations and Financial Condition.

On August 9, 2016, SunPower Corporation issued a press release, included as Exhibit 99.1 hereto, announcing its results of operations for its second fiscal quarter ended July 3, 2016.

The information furnished in Item 2.02 and Item 9.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 2.05.
Costs Associated with Exit or Disposal Activities.

On August 9, 2016, the Company adopted and began implementing initiatives to realign the Company’s downstream investments, optimize the Company’s supply chain and reduce operating expenses, in response to expected near-term challenges primarily relating to the Company’s power plant segment. In connection with the realignment, which is expected to be completed by the end of fiscal 2017, the Company expects approximately 1,200 employees to be affected, primarily in the Philippines, representing approximately 15% of the Company’s global workforce. The Company expects to incur restructuring charges totaling approximately $30 million to $45 million, consisting primarily of severance benefits, asset impairments, lease and related termination costs, and other associated costs. A substantial portion of such charges are expected to be incurred in the third quarter of fiscal 2016, and the Company expects more than 50% of total charges to be cash. The actual timing and costs of the plan may differ from the Company’s current expectations and estimates.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 5, 2016, the Compensation Committee approved a reduction of the salary of Thomas Werner, our President and Chief Executive Officer, to $1, net of benefit costs, for the remainder of the fiscal year, with such change to take effect for the pay period beginning on August 1, 2016. The reduction was at Mr. Werner’s request in light of the difficult market conditions the Company is facing and based on his desire to set an example for cost reduction across the organization. Mr. Werner has also informed the Compensation Committee of his intent to decline any bonus that would otherwise be awarded to him for the fiscal 2016 measurement period.

Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits
 
Exhibit No.
Description
 
 
99.1
Press release dated August 9, 2016




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
SUNPOWER CORPORATION
 
 
 
August 9, 2016
By:
/S/ CHARLES D. BOYNTON
 
Name:
Charles D. Boynton
 
Title:
Executive Vice President and
Chief Financial Officer





EXHIBIT INDEX
 
Exhibit No.
Description
 
 
99.1
Press release dated August 9, 2016





Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Investors
Bob Okunski
408-240-5447

Media
Natalie Wymer
408-457-2348


SunPower Reports Second Quarter 2016 Results
Company Announces Realignment of Power Plant Segment and Manufacturing Operations
Updates Fiscal Year 2016 Guidance

SAN JOSE, Calif., Aug 9, 2016 - SunPower Corp. (NASDAQ: SPWR) today announced financial results for its second quarter ended July 3, 2016.

($ Millions, except percentages and per-share data)
2nd Quarter 2016
1st Quarter 2016
2nd Quarter 2015
GAAP revenue
$420.5
$384.9
$381.0
GAAP gross margin
9.8%
13.4%
18.6%
GAAP net income (loss)
$(70.0)
$(85.4)
$6.5
GAAP net income (loss) per diluted share
$(0.51)
$(0.62)
$0.04
Non-GAAP revenue1
$401.8
$433.6
$376.7
Non-GAAP gross margin1
13.1%
13.6%
17.6%
Non-GAAP net income (loss)1
$(30.1)
$(41.2)
$27.2
Non-GAAP net income (loss) per diluted share1
$(0.22)
$(0.30)
$0.18
EBITDA1
$29.9
$6.3
$63.6
1 
Information about SunPower's use of non-GAAP financial information, including a reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP Financial Measures" below.

“Our second quarter execution was solid as we met our financial targets and achieved key milestones across the company,” said Tom Werner, SunPower president and CEO. “During the quarter we saw significant customer demand for our recently introduced Helix™ and SunPower Equinox™ complete commercial and residential solutions, respectively. We are also seeing stronger than anticipated demand and price premium for our highest efficiency, next generation X-21 and X-22 Series solar panels. In our upstream solar cell and panel manufacturing operations, we delivered strong yields and panel output in our fabs, continued our technology leadership with the announcement of our world record 24.1 percent efficient rooftop solar panel and successfully started up our first high volume, Performance Series production lines in Mexico.

“In our distributed generation business for the second quarter, we saw solid execution in both the residential and commercial segments. In commercial, our performance was above plan as we successfully ramped our Helix product deployment to approximately 20 megawatts (MW) in the second quarter while signing over 25 MW of new contracts for customers such as the U.S. Army. We were also pleased to complete the drop down of our Macy’s project to 8point3 Energy Partners, and we continue to believe that 8point3 Energy Partners will be a key strategic vehicle for the company going forward. With a record pipeline of more than $1.3 billion, strong bookings, currently stable pricing and the continued successful ramp of our Helix solution, we are well positioned to gain share in the commercial market. Our residential segment also performed well, with solid fundamentals in the U.S. and improving traction in Europe and Japan. In the U.S., we are seeing a pronounced shift to




our new SunPower Equinox complete solution which accounted for 50 percent of bookings by the end of the quarter. Total U.S. residential MW deployment was up approximately 25 percent year-over-year, and we continued to expand our utility channel initiatives, most recently a new solar plus storage partnership with Consolidated Edison.

“In our power plant segment, we expanded our international project backlog with the announcement of more than 250 MW of projects in Chile, bringing our total Latin America signed Power Purchase Agreement (PPA) portfolio to over 800 MW. Additionally, we secured 40 MW of innovative solar plus battery storage projects for deployment in the French overseas territories. In the U.S., we were pleased to announce the sale of a controlling interest in our 102-MW Henrietta project to Southern Company and added to our public sector footprint as we started construction of our 9.5-MW project for the California Department of Water Resources.

“However, while the long-term fundamentals for solar power remain strong, we see a number of near-term industry challenges, primarily in our power plant segment, that we expect to impact our business and financial performance in the second half of 2016. The extension of the Investment Tax Credit, as well as the bonus depreciation credit, while beneficial to the long-term health of the industry, has reduced the urgency to complete new solar projects by the end of 2016, with many customers adopting a longer-term timeline for project completion. Additionally, near-term economic returns have deteriorated due to aggressive PPA pricing by new market entrants, including a number of large, global independent power companies. We are also seeing customer project IRRs rising in the near term as buyers have increased their hurdle rates due to industry conditions. Finally, the continued market disruption in the YieldCo environment has impacted our assumptions related to monetizing deferred profits.

“As a result, we have proactively decided to streamline our power plant development segment while shifting investment to our distributed generation (DG) segments. We intend to focus our development resources on a limited number of core markets, primarily in the Americas, where we believe we have a sustainable competitive advantage and a project pipeline of over 9 gigawatts (GW). Outside these core markets, we will focus our power plant business on the sale of our new Oasis complete solution incorporating Performance Series panel technology to developers and Engineering, Procurement and Construction companies in global markets, including Total. We also plan to delay the timing of certain projects in our 2016 and 2017 pipeline to take advantage of planned cost reduction efforts over the next two years. We expect these actions to significantly lower operating expense and capital deployment in our power plant business while maintaining leadership in our core markets.

“Additionally, we are realigning our manufacturing operations to increase the relative mix of X-Series capacity due to expected strong customer demand in our DG business as well as adjusting our panel assembly capacity to be closer to our core markets. We plan to utilize equipment from some of our older solar cell manufacturing lines in Fab 2 to debottleneck capacity of our latest generation technology in order to increase the supply of X-Series panels. These initiatives will enable us to increase X-Series output by up to 100 MW by the end of 2017. Additionally, in connection with the realignment of our power plant segment principally around our core markets, we have made the decision to close our Philippine panel assembly facility and transfer the equipment to our latest generation, lower cost facilities in Mexico. This change will optimize our supply chain and move final panel assembly closer to our key markets.

“Overall, we expect these initiatives will strengthen our overall competitive position and enable us to profitably capitalize on the anticipated global growth of solar power as a long term, mainstream energy source. The core foundation of our long-term strategy remains unchanged, namely, developing innovative, complete customer solutions based on differentiated technology and deploying these solutions across a diversified portfolio of applications and geographic markets,” concluded Werner.

“Our solid second quarter performance reflects the benefits of our diversified go-to-market strategy” said Chuck Boynton, SunPower Chief Financial Officer. “Our balance sheet remains strong as we exited the quarter with more than $590 million in cash. Looking forward, we believe our realignment plan will enable us to expand our leadership position in distributed generation, further strengthen our presence in our core power plant markets, improve cash flow and lower our annual operating expenses by up to 10 percent.”

As a result of the announced realignment, the company expects the following:
•
Workforce reduction of approximately 15 percent or 1,200 employees, primarily related to its Philippine facility closure
•
Restructuring charges totaling $30-$45 million
•
Substantial portion of charges to be incurred in the third quarter of 2016 with more than 50 percent of the total charges to be cash
•
Annual operating expense reductions of approximately 10 percent





Additionally, second quarter fiscal 2016 non-GAAP results include net adjustments that, in the aggregate, decreased (increased) non-GAAP net loss by $39.9 million, including $18.0 million related to 8point3 Energy Partners, $4.1 million related to utility and power plant projects, $3.0 million related to sale of operating lease assets, $3.0 million related to sale-leaseback transactions, $16.5 million related to stock-based compensation expense, $(2.2) million related to other adjustments, and $(2.5) million related to tax effect.

Financial Outlook
As a result of the challenges described above, the company is updating its previously disclosed fiscal year 2016 guidance, as well as providing selected forecasts for fiscal year 2017.

On a GAAP basis, the company now expects 2016 revenue of $2.8 billion to $3.0 billion, gross margin of 9.5 percent to 11.5 percent and net loss of $175 million to $125 million. Fiscal year 2016 GAAP guidance includes the impact of the company’s HoldCo asset strategy and revenue and timing deferrals due to real estate accounting.

The company’s updated 2016 non-GAAP financial guidance is as follows: revenue of $3.0 billion to $3.2 billion, gross margin of 10.5 percent to 12.5 percent, EBITDA of $275 million to $325 million, capital expenditures of $225 million to $245 million and gigawatts deployed in the range of 1.45 GW to 1.65 GW.

For 2017, the company expects a GAAP net loss of $200 million to $100 million and EBITDA in the range of $300 million to $400 million. The company expects that at the lower end of the guidance range, 2017 EBITDA would be generated almost entirely from the company’s DG business and believes that with the announced realignment, it will be well positioned to capitalize on the long term growth potential in the global power plant market.
 
The company’s third quarter fiscal 2016 GAAP guidance is as follows: revenue of $700 million to $800 million, gross margin of 14.5 percent to 16.5 percent and net loss of $5 million to net income of $20 million. Third quarter 2016 GAAP guidance includes the impact of the company’s HoldCo asset strategy and revenue and timing deferrals due to real estate accounting. On a non-GAAP basis, the company expects revenue of $750 million to $850 million, gross margin of 16.5 percent to 18.5 percent, EBITDA of $115 million to $140 million and megawatts deployed in the range of 380 MW to 420 MW.

The company will host a conference call for investors this afternoon to discuss its second quarter 2016 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower’s website at http://investors.sunpower.com/events.cfm.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its second quarter 2016 performance on the Events and Presentations section of SunPower’s Investor Relations page at http://investors.sunpower.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.

About SunPower
As one of the world’s most innovative and sustainable energy companies, SunPower Corp. (NASDAQ: SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools and utilities around the globe rely on SunPower’s more than 30 years of proven experience. From the first flip of the switch, SunPower delivers maximum value and performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, and North and South America. For more information about how SunPower is changing the way our world is powered, visit www.sunpower.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) our positioning for future success, gains in market share, competitive advantage, and ability to profitably capitalize on future market growth, including in our core markets; (b) the long-term fundamentals for solar power; (c) our plans for realignment of our manufacturing operations and power plant segment, including the anticipated increase in X-series output; (d) our expectations for the success and financial impact of our planned realignment, including impact on our balance sheet, long term cash flow and annual operating expenses; (e) our ability to reduce costs, including operating expense and capital deployment in our power plant business; (f) our project pipeline; (g) 8point3’s role within our company strategy; (h) the ramp of our Helix solution; (i) third quarter fiscal 2016 guidance, including GAAP revenue, gross margin, and net income (loss), as well as non-GAAP revenue, gross margin, EBITDA, and MW deployed; (j) full year fiscal 2016 guidance, including GAAP revenue, gross margin and net loss, as well as non-GAAP revenue, gross margin, capital expenditures, EBITDA, and gigawatts deployed and (k) our full year fiscal 2017 selected forecasts.  These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) regulatory changes and the availability of




economic incentives promoting use of solar energy; (4) challenges inherent in constructing certain of our large projects; (5) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (6) fluctuations in our operating results; (7) maintaining or increasing our manufacturing capacity and containing manufacturing difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful; (10) fluctuations or declines in the performance of our solar panels and other products and solutions; (11) our ability to meet our cost reduction targets and implement the planned realignment of our manufacturing operations and power plant segment and (12) the outcomes of previously disclosed litigation.  A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”  Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com.  All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

©2016 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, SUNPOWER EQUINOX, HELIX and OASIS are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.


 





SUNPOWER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


 
Jul. 3, 2016
 
Jan. 3, 2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
590,091

 
$
954,528

Restricted cash and cash equivalents, current portion
23,091

 
24,488

Accounts receivable, net
211,753

 
190,448

Costs and estimated earnings in excess of billings
32,677

 
38,685

Inventories
467,914

 
382,390

Advances to suppliers, current portion
72,061

 
85,012

Project assets - plants and land, current portion
904,429

 
479,452

Prepaid expenses and other current assets
306,616

 
359,517

Total current assets
2,608,632

 
2,514,520

 
 
 
 
Restricted cash and cash equivalents, net of current portion
45,891

 
41,748

Restricted long-term marketable securities
6,362

 
6,475

Property, plant and equipment, net
818,711

 
731,230

Solar power systems leased and to be leased, net
594,266

 
531,520

Project assets - plants and land, net of current portion
26,282

 
5,072

Advances to suppliers, net of current portion
246,468

 
274,085

Long-term financing receivables, net
429,910

 
334,791

Goodwill and other intangible assets, net
107,547

 
119,577

Other long-term assets
317,095

 
297,975

Total assets
$
5,201,164

 
$
4,856,993

 
 
 
 
Liabilities and Equity
 
 
 

Current liabilities:
 
 
 

Accounts payable
$
518,598

 
$
514,654

Accrued liabilities
373,874

 
313,497

Billings in excess of costs and estimated earnings
92,295

 
115,739

Short-term debt
350,764

 
21,041

Customer advances, current portion
41,544

 
33,671

Total current liabilities
1,377,075

 
998,602

 
 
 
 
Long-term debt
578,231

 
478,948

Convertible debt
1,112,127

 
1,110,960

Customer advances, net of current portion
112,663

 
126,183

Other long-term liabilities
578,917

 
564,557

Total liabilities
3,759,013

 
3,279,250

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
90,551

 
69,104

 
 
 
 
Equity:
 
 
 





Preferred stock
—

 
—

Common stock
138

 
137

Additional paid-in capital
2,391,912

 
2,359,917

Accumulated deficit
(903,018
)
 
(747,617
)
Accumulated other comprehensive loss
(12,601
)
 
(8,023
)
Treasury stock, at cost
(174,937
)
 
(155,265
)
Total stockholders' equity
1,301,494

 
1,449,149

Noncontrolling interests in subsidiaries
50,106

 
59,490

Total equity
1,351,600

 
1,508,639

Total liabilities and equity
$
5,201,164

 
$
4,856,993






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
Revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
$
177,715

 
$
151,807

 
$
152,205

 
$
329,522

 
$
307,529

Commercial
 
97,846

 
52,241

 
62,984

 
150,087

 
112,047

Power Plant
 
144,891

 
180,827

 
165,831

 
325,718

 
402,315

Total revenue
 
420,452

 
384,875

 
381,020

 
805,327

 
821,891

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
138,959

 
118,160

 
116,979

 
257,119

 
239,751

Commercial
 
89,523

 
45,226

 
58,842

 
134,749

 
105,722

Power Plant
 
150,676

 
169,952

 
134,318

 
320,628

 
314,719

Total cost of revenue
 
379,158

 
333,338

 
310,139

 
712,496

 
660,192

Gross margin
 
41,294

 
51,537

 
70,881

 
92,831

 
161,699

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
31,411

 
32,706

 
20,560

 
64,117

 
41,728

Selling, general and administrative
 
84,683

 
97,791

 
81,520

 
182,474

 
158,734

Restructuring charges
 
117

 
96

 
1,749

 
213

 
5,330

Total operating expenses
 
116,211

 
130,593

 
103,829

 
246,804

 
205,792

Operating loss
 
(74,917
)
 
(79,056
)
 
(32,948
)
 
(153,973
)
 
(44,093
)
Other income (expense), net
 
(18,966
)
 
(18,416
)
 
6,959

 
(37,382
)
 
(10,786
)
Loss before income taxes and equity in earnings (loss) of unconsolidated investees
 
(93,883
)
 
(97,472
)
 
(25,989
)
 
(191,355
)
 
(54,879
)
Benefit from (provision for) income taxes
 
(6,648
)
 
(3,181
)
 
659

 
(9,829
)
 
(1,692
)
Equity in earnings (loss) of unconsolidated investees
 
8,350

 
(764
)
 
1,864

 
7,586

 
4,055

Net loss
 
(92,181
)
 
(101,417
)
 
(23,466
)
 
(193,598
)
 
(52,516
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
22,189

 
16,008

 
29,975

 
38,197

 
49,444

Net income (loss) attributable to stockholders
 
$
(69,992
)
 
$
(85,409
)
 
$
6,509

 
$
(155,401
)
 
$
(3,072
)
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to stockholders:
 
 
 
 
 
 
 
 
 
 
- Basic
 
$
(0.51
)
 
$
(0.62
)
 
$
0.05

 
$
(1.13
)
 
$
(0.02
)
- Diluted
 
$
(0.51
)
 
$
(0.62
)
 
$
0.04

 
$
(1.13
)
 
$
(0.02
)
Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
- Basic
 
138,084

 
137,203

 
134,376

 
137,644

 
133,205

- Diluted
 
138,084

 
137,203

 
156,995

 
137,644

 
133,205






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(92,181
)
 
$
(101,417
)
 
$
(23,466
)
 
$
(193,598
)
 
$
(52,516
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
 
40,898

 
42,117

 
31,442

 
83,015

 
60,005

Stock-based compensation
 
16,475

 
16,520

 
14,040

 
32,995

 
27,586

Non-cash interest expense
 
309

 
346

 
571

 
655

 
5,251

Equity in loss (earnings) of unconsolidated investees
 
(8,350
)
 
764

 
(1,864
)
 
(7,586
)
 
(4,055
)
Excess tax benefit from stock-based compensation
 
—

 
—

 
(6,155
)
 
—

 
(6,727
)
Deferred income taxes
 
2,018

 
(1,169
)
 
6,874

 
849

 
(367
)
Gain on sale of residential lease portfolio to 8point3 Energy Partners LP
 
—

 
—

 
(27,915
)
 
—

 
(27,915
)
Other, net
 
909

 
890

 
522

 
1,799

 
1,377

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
(35,856
)
 
12,561

 
32,467

 
(23,295
)
 
65,202

Costs and estimated earnings in excess of billings
 
23,826

 
(17,525
)
 
(2,332
)
 
6,301

 
138,638

Inventories
 
(96,799
)
 
(18,248
)
 
(22,654
)
 
(115,047
)
 
(130,726
)
Project assets
 
(254,007
)
 
(179,376
)
 
(218,624
)
 
(433,383
)
 
(311,774
)
Prepaid expenses and other assets
 
93,743

 
(45,034
)
 
54,515

 
48,709

 
29,425

Long-term financing receivables, net
 
(51,108
)
 
(44,011
)
 
(40,060
)
 
(95,119
)
 
(69,258
)
Advances to suppliers
 
28,656

 
11,913

 
11,191

 
40,569

 
25,094

Accounts payable and other accrued liabilities
 
82,051

 
(69,974
)
 
(21,911
)
 
12,077

 
(71,529
)
Billings in excess of costs and estimated earnings
 
(49,915
)
 
26,866

 
3,709

 
(23,049
)
 
9,330

Customer advances
 
(760
)
 
(5,124
)
 
(2,383
)
 
(5,884
)
 
(12,482
)
Net cash used in operating activities
 
(300,091
)
 
(369,901
)
 
(212,033
)
 
(669,992
)
 
(325,441
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Increase in restricted cash and cash equivalents
 
(941
)
 
(1,806
)
 
(9,579
)
 
(2,747
)
 
(28,407
)
Purchases of property, plant and equipment
 
(46,280
)
 
(47,044
)
 
(44,214
)
 
(93,324
)
 
(68,778
)




Cash paid for solar power systems, leased and to be leased
 
(22,918
)
 
(23,238
)
 
(22,429
)
 
(46,156
)
 
(41,832
)
Cash paid for solar power systems
 
(2,282
)
 
—

 
(10,007
)
 
(2,282
)
 
(10,007
)
Proceeds from (payments to) 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio
 
130

 
(9,968
)
 
341,174

 
(9,838
)
 
341,174

Cash paid for investments in unconsolidated investees
 
(557
)
 
(9,752
)
 
(7,092
)
 
(10,309
)
 
(7,092
)
Cash paid for intangibles
 
—

 
—

 
—

 
—

 
(526
)
Net cash provided by (used in) investing activities
 
(72,848
)
 
(91,808
)
 
247,853

 
(164,656
)
 
184,532

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Cash paid for repurchase of convertible debt
 
—

 
—

 
—

 
—

 
(324,273
)
Proceeds from settlement of 4.50% Bond Hedge
 
—

 
—

 
—

 
—

 
74,628

Payments to settle 4.50% Warrants
 
—

 
—

 
(574
)
 
—

 
(574
)
Repayment of bank loans and other debt
 
(162
)
 
(7,725
)
 
(7,873
)
 
(7,887
)
 
(15,819
)
Proceeds from issuance of non-recourse residential financing, net of issuance costs
 
24,889

 
28,339

 
54,830

 
53,228

 
54,830

Repayment of non-recourse residential financing
 
(1,101
)
 
(1,065
)
 
(29,858
)
 
(2,166
)
 
(40,802
)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
33,083

 
24,082

 
46,046

 
57,165

 
91,936

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
(1,596
)
 
(5,309
)
 
(2,307
)
 
(6,905
)
 
(4,567
)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs
 
354,052

 
79,440

 
116,992

 
433,492

 
207,710

Repayment of non-recourse power plant and commercial financing
 
(51
)
 
(37,301
)
 
(226,488
)
 
(37,352
)
 
(226,578
)
Proceeds from 8point3 Energy Partners LP attributable to operating leases and unguaranteed sales-type lease residual values
 
—

 
—

 
29,300

 
—

 
29,300

Proceeds from exercise of stock options
 
—

 
—

 
175

 
—

 
178

Excess tax benefit from stock-based compensation
 
—

 
—

 
6,155

 
—

 
6,727





Purchases of stock for tax withholding obligations on vested restricted stock
 
(795
)
 
(18,876
)
 
(1,622
)
 
(19,671
)
 
(40,326
)
Net cash provided by (used in) financing activities
 
408,319

 
61,585

 
(15,224
)
 
469,904

 
(187,630
)
Effect of exchange rate changes on cash and cash equivalents
 
(467
)
 
774

 
874

 
307

 
(4,593
)
Net increase (decrease) in cash and cash equivalents
 
34,913

 
(399,350
)
 
21,470

 
(364,437
)
 
(333,132
)
Cash and cash equivalents, beginning of period
 
555,178

 
954,528

 
601,573

 
954,528

 
956,175

Cash and cash equivalents, end of period
 
$
590,091

 
$
555,178

 
$
623,043

 
$
590,091

 
$
623,043

 
 
 
 
 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
 
 
 
 
Assignment of residential lease receivables to third parties
 
$
1,379

 
$
1,097

 
$
382

 
$
2,476

 
$
1,689

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
14,806

 
15,085

 
15,764

 
29,891

 
30,428

Costs of solar power systems, leased and to be leased, funded by liabilities
 
6,282

 
9,050

 
3,971

 
6,282

 
3,971

Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets
 
7,375

 
—

 
5,026

 
7,375

 
6,076

Property, plant and equipment acquisitions funded by liabilities
 
73,247

 
81,369

 
37,017

 
73,247

 
37,017

Sale of residential lease portfolio in exchange for non-controlling equity interests in the 8point3 Group
 
—

 
—

 
68,273

 
—

 
68,273

Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group
 
—

 
8,726

 
—

 
8,726

 
—

Exchange of receivables for an investment in an unconsolidated investee

 
2,890

 
—

 
—

 
2,890

 
—







Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross margin; net income; net income per diluted share; and earnings before interest, taxes, depreciation and amortization (“EBITDA”). Management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provides investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analyses. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; the non-GAAP measures should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP revenue includes adjustments relating to 8point3, utility and power plant projects, the sale of operating lease assets, and sale-leaseback transactions, each as described below. Non-GAAP gross margin includes adjustments relating to 8point3, utility and power plant projects, the sale of operating lease assets, sale-leaseback transactions, stock-based compensation, and other items, each as described below. In addition to those same adjustments, non-GAAP net income and non-GAAP net income per diluted share are adjusted for the tax effect of these non-GAAP adjustments as described below. In addition to the same adjustments as non-GAAP net income, EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards (“IFRS”)

Management utilizes IFRS guidance for non-GAAP purposes to record the revenue and profit recognition of certain transactions, each of which are further described below. In these situations, management believes that the IFRS standards enable investors to better evaluate the company’s revenue and profit generation performance.

•
8point3. In 2015, 8point3 Energy Partners LP ("8point3 Energy Partners"), a joint YieldCo vehicle, was formed by the company and First Solar, Inc. ("First Solar" and, together with the company, the "Sponsors") to own, operate and acquire solar energy generation assets. Class A shares of 8point3 Energy Partners are now listed on the NASDAQ Global Select Market under the trading symbol “CAFD.” Immediately after the IPO, the company contributed a portfolio of 170 MW of its solar generation assets (the “SPWR Projects”) to 8point3 Operating Company, LLC ("OpCo"), 8point3 Energy Partners' primary operating subsidiary. In exchange for the SPWR Projects, the company received cash proceeds as well as equity interests in several 8point3 Energy Partners affiliated entities: primarily common and subordinated units representing a 40.7% stake in OpCo and a 50.0% economic and management stake in 8point3 Holding Company, LLC (“Holdings”), the parent company of the general partner of 8point3 Energy Partners and the owner of incentive distribution rights in OpCo. Holdings, OpCo, 8point3 Energy Partners and their respective subsidiaries are referred to herein as the “8point3 Group” or “8point3.”

The company includes adjustments related to the sales of projects contributed to 8point3 based on the difference between the fair market value of the consideration received and the net carrying value of the projects contributed, of which, a portion is deferred in proportion to the company’s retained equity stake in 8point3. The deferred profit is subsequently recognized over time. This treatment is consistent with the accounting rules relating to the sale of such projects under IFRS. Under these rules, with certain exceptions




such as for projects already in operation, the company’s revenue is equal to the fair market value of the consideration received, and cost of goods sold is equal to the net carrying value plus a partial deferral of profit proportionate with the retained equity stake. Under GAAP, these sales are recognized under either real estate, lease, or consolidation accounting guidance depending upon the nature of the individual asset contributed, with outcomes ranging from no profit recognition to full profit recognition. IFRS profit, less deferrals associated with retained equity, is recognized for sales related to the residential lease portfolio. Revenue recognition for other projects sold to 8point3 is deferred until these projects reach commercial operations, consistent with IFRS rules. Equity in earnings of unconsolidated investees also includes the impact of the company’s share of 8point3’s earnings related to sales of projects receiving sales recognition under IFRS but not GAAP.

•
Utility and power plant projects. The company includes adjustments related to the revenue recognition of utility and power plant projects based on the separately-identifiable components of transactions in order to reflect the substance of the transactions. This treatment is consistent with accounting rules relating to such projects under IFRS. Under GAAP, such projects are accounted for under real estate accounting guidance. Management calculates separate revenue and cost of revenue amounts each fiscal period in accordance with the two treatments above and the aggregate difference for the company’s affected projects is included in the relevant reconciliation tables below. Over the life of each project, cumulative revenue and gross margin will be equivalent under the two treatments; however, revenue and gross margin will generally be recognized earlier under the company’s non-GAAP treatment than under the company’s GAAP treatment. Among other factors, this is due to the attribution of non-GAAP revenue and margin to the company’s project development efforts at the time of initial project sale as required under IFRS accounting rules, whereas no separate attribution to this element occurs under GAAP real estate accounting guidance. Within each project, the relationship between the adjustments to revenue and gross margins is generally consistent. However, as the company may have multiple utility and power plant projects in progress at any given time, the relationship in the aggregate will occasionally appear otherwise.

•
Sale of operating lease assets. The company includes adjustments related to the revenue recognition of the sale of certain solar assets subject to an operating lease (or of solar assets that are leased by or intended to be leased by the third-party purchaser to another party) based on the net proceeds received from the purchaser. This treatment is consistent with accounting rules relating to the sale of such assets under IFRS. Under GAAP, these sales are accounted for as borrowing transactions in accordance with lease accounting guidance. Under such guidance, revenue and profit recognition is based on rental payments made by the end lessee, and the net proceeds from the purchaser are recorded as a non-recourse borrowing liability, with imputed interest expense recorded on the liability. This treatment continues until the company has transferred the substantial risks of ownership, as defined by lease accounting guidance, to the purchaser, at which point the sale is recognized.

•
Sale-leaseback transactions. The company includes adjustments related to the revenue recognition of certain sale-leaseback transactions based on the net proceeds received from the buyer-lessor. This treatment is consistent with accounting rules relating to such transactions under IFRS. Under GAAP, these transactions are accounted for under the financing method in accordance with real estate accounting guidance. Under such guidance, no revenue or profit is recognized at the inception of the transaction, and the net proceeds from the buyer-lessor are recorded as a financing liability. Imputed interest is recorded on the liability equal to the company’s incremental borrowing rate adjusted solely to prevent negative amortization.

Other Non-GAAP Adjustments

•
Stock-based compensation. Stock-based compensation relates primarily to the company’s equity incentive awards. Stock-based compensation is a non-cash expense that varies from period to period and is dependent on market forces that are difficult to predict. Due to this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including




compared with the performance of other companies, without the period-to-period variability created by stock-based compensation.

•
Other. The company combines amounts previously disclosed under separate captions into “Other” when amounts do not have a significant impact on the current fiscal period. Management believes that these adjustments provide investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.

The amounts recorded in “Other” during the second quarter of fiscal 2016 are driven by adjustments which would have previously been disclosed under other non-GAAP adjustment captions, including “FPSC arbitration ruling,” “IPO related costs,” “Amortization of intangible assets,” “Non-cash interest expense,” and “Restructuring.”

•
Tax effect. This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income and non-GAAP net income per diluted share. The company's non-GAAP tax amount is based on estimated cash tax expense and reserves. The company forecasts its annual cash tax liability and allocates the tax to each quarter in a manner generally consistent with its GAAP methodology. This approach is designed to enhance investors’ ability to understand the impact of the company's tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense.

•
EBITDA adjustments. When calculating EBITDA, in addition to adjustments described above, the company excludes the impact during the period of the following items:

•
Cash interest expense, net of interest income
•
Provision for (benefit from) income taxes
•
Depreciation

Management presents this non-GAAP financial measure to enable investors to evaluate the company's performance, including compared with the performance of other companies.

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.





SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)

Adjustments to Revenue: 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
GAAP revenue
 
$
420,452

 
$
384,875

 
$
381,020

 
$
805,327

 
$
821,891

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,400
)
 
(15,174
)
 
—

 
(16,574
)
 
—

Utility and power plant projects
 
(40,085
)
 
53,538

 
(4,313
)
 
13,453

 
(14,583
)
Sale of operating lease assets
 
10,183

 
10,403

 
—

 
20,586

 
—

Sale-leaseback transactions
 
12,646

 
—

 
—

 
12,646

 
—

Non-GAAP revenue
 
$
401,796

 
$
433,642

 
$
376,707

 
$
835,438

 
$
807,308


Adjustments to Gross margin: 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
GAAP gross margin
 
$
41,294

 
$
51,537

 
$
70,881

 
$
92,831

 
$
161,699

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(210
)
 
(4,642
)
 
—

 
(4,852
)
 
—

Utility and power plant projects
 
4,128

 
3,557

 
(4,328
)
 
7,685

 
(15,579
)
Sale of operating lease assets
 
2,966

 
3,112

 
—

 
6,078

 
—

Sale-leaseback transactions
 
2,988

 
—

 
—

 
2,988

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
5,464

 
4,125

 
3,259

 
9,589

 
5,825

Other
 
(4,038
)
 
1,333

 
(3,669
)
 
(2,705
)
 
2,359

Non-GAAP gross margin
 
$
52,592

 
$
59,022

 
$
66,143

 
$
111,614

 
$
154,304

 
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (%)
 
9.8
%
 
13.4
%
 
18.6
%
 
11.5
%
 
19.7
%
Non-GAAP gross margin (%)
 
13.1
%
 
13.6
%
 
17.6
%
 
13.4
%
 
19.1
%





Adjustments to Net income (loss): 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
GAAP net income (loss) attributable to stockholders
 
$
(69,992
)
 
$
(85,409
)
 
$
6,509

 
$
(155,401
)
 
$
(3,072
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
18,039

 
10,719

 
(4,688
)
 
28,758

 
(4,688
)
Utility and power plant projects
 
4,128

 
3,557

 
(4,328
)
 
7,685

 
(15,579
)
Sale of operating lease assets
 
2,979

 
3,120

 
—

 
6,099

 
—

Sale-leaseback transactions
 
2,988

 
—

 
—

 
2,988

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
16,475

 
16,520

 
14,040

 
32,995

 
27,586

Other
 
(2,235
)
 
8,608

 
13,838

 
6,373

 
37,908

Tax effect
 
(2,454
)
 
1,684

 
1,797

 
(770
)
 
4,737

Non-GAAP net income (loss) attributable to stockholders
 
$
(30,072
)
 
$
(41,201
)
 
$
27,168

 
$
(71,273
)
 
$
46,892






Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
Net income (loss) per diluted share
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) available to common stockholders1
 
$
(69,992
)
 
$
(85,409
)
 
$
7,021

 
$
(155,401
)
 
$
(3,072
)
Non-GAAP net income (loss) available to common stockholders1
 
$
(30,072
)
 
$
(41,201
)
 
$
27,679

 
$
(71,273
)
 
$
47,954

 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average shares
 
138,084

 
137,203

 
156,995

 
137,644

 
133,205

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Stock options
 
—

 
—

 
—

 
—

 
39

Restricted stock units
 
—

 
—

 
—

 
—

 
2,239

Upfront Warrants (held by Total)
 
—

 
—

 
—

 
—

 
7,055

Warrants (under the CSO2015)
 
—

 
—

 
—

 
—

 
1,827

0.75% debentures due 2018
 
—

 
—

 
—

 
—

 
12,026

Non-GAAP weighted-average shares1
 
138,084

 
137,203

 
156,995

 
137,644

 
156,391

 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
 
$
(0.51
)
 
$
(0.62
)
 
$
0.04

 
$
(1.13
)
 
$
(0.02
)
Non-GAAP net income (loss) per diluted share
 
$
(0.22
)
 
$
(0.30
)
 
$
0.18

 
$
(0.52
)
 
$
0.31

1 
In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 0.75%, 0.875% and 4.0% debentures if the debentures are considered converted in the calculation of net income (loss) per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the debenture under the if-converted method is excluded from the calculation of non-GAAP net income (loss) per diluted share.






EBITDA:
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 3, 2016
 
Apr. 3, 2016
 
Jun. 28, 2015
 
Jul. 3, 2016
 
Jun. 28, 2015
GAAP net income (loss) attributable to stockholders
 
$
(69,992
)
 
$
(85,409
)
 
$
6,509

 
$
(155,401
)
 
$
(3,072
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
18,039

 
10,719

 
(4,688
)
 
28,758

 
(4,688
)
Utility and power plant projects
 
4,128

 
3,557

 
(4,328
)
 
7,685

 
(15,579
)
Sale of operating lease assets
 
2,979

 
3,120

 
—

 
6,099

 
—

Sale-leaseback transactions
 
2,988

 
—

 
—

 
2,988

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
16,475

 
16,520

 
14,040

 
32,995

 
27,586

Cash interest expense, net of interest income
 
13,144

 
12,184

 
8,023

 
25,328

 
19,115

Provision for (benefit from) income taxes
 
6,648

 
3,181

 
(659
)
 
9,829

 
1,692

Depreciation
 
37,730

 
33,826

 
30,820

 
71,556

 
59,424

Other
 
(2,235
)
 
8,608

 
13,838

 
6,373

 
37,908

EBITDA
 
$
29,904

 
$
6,306

 
$
63,555

 
$
36,210

 
$
122,386









Q3 2016, FY 2016, and FY 2017 GUIDANCE
(in thousands except percentages)
Q3 2016
FY 2016
FY 2017
Revenue (GAAP)
$700,000-$800,000
$2,800,000-$3,000,000
N/A
Revenue (non-GAAP)1
$750,000-$850,000
$3,000,000-$3,200,000
N/A
Gross margin (GAAP)
14.5%-16.5%
9.5%-11.5%
N/A
Gross margin (non-GAAP)2
16.5%-18.5%
10.5%-12.5%
N/A
Net income (loss) (GAAP)
($5,000)-$20,000
($175,000)-($125,000)
($200,000)-($100,000)
EBITDA3
$115,000-$140,000
$275,000-$325,000
$300,000-$400,000

1.
Estimated non-GAAP amounts above for Q3 2016 include net adjustments that increase revenue by approximately $35 million related to 8point3, $10 million related to sale of operating lease assets, and $5 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2016 include net adjustments that increase (decrease) revenue by approximately $20 million related to 8point3, $5 million related to utility and power plant projects, ($5) million related to sale of operating lease assets, and $180 million related to sale-leaseback transactions.

2.
Estimated non-GAAP amounts above for Q3 2016 include net adjustments that increase gross margin by approximately $13 million related to 8point3, $3 million related to sale of operating lease assets, $1 million related to sale-leaseback transactions, $5 million related to stock-based compensation expense, and $1 million related to other items. Estimated non-GAAP amounts above for fiscal 2016 include net adjustments that increase (decrease) gross margin by approximately $15 million related to 8point3, ($2) million related to sale of operating lease assets, $20 million related to sale-leaseback transactions, and $20 million related to stock-based compensation expense.

3.
Estimated EBITDA amounts above for Q3 2016 include net adjustments that increase (decrease) net income by approximately $16 million related to 8point3, $3 million related to sale of operating lease assets, $1 million related to sale-leaseback transactions, $17 million related to stock-based compensation expense, $20 million related to restructuring, $5 million related to other items, $15 million related to interest expense, ($2) million related to income taxes, and $45 million related to depreciation. Estimated EBITDA amounts above for fiscal 2016 include net adjustments that increase (decrease) net loss by approximately ($60) million related to 8point3, $2 million related to sale of operating lease assets, ($20) million related to sale-leaseback transactions, ($70) million related to stock-based compensation expense, ($30) million related to restructuring, ($17) million related to other items, ($55) million related to interest expense, ($20) million related to income taxes, and ($180) million related to depreciation. Estimated EBITDA amounts above for fiscal 2017 include net adjustments that decrease net loss by approximately ($65) million related to sale-leaseback transactions, ($70) million related to stock-based compensation expense, ($25) million related to other items, ($65) million related to interest expense, ($25) million related to income taxes, and ($250) million related to depreciation.







SUPPLEMENTAL DATA
(In thousands, except percentages)

The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross margin, net income and net income per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.


THREE MONTHS ENDED
 
 
July 3, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
177,715

 
$
97,846

 
$
144,891

 
$
38,756

 
21.8
%
 
$
8,323

 
8.5
%
 
$
(5,785
)
 
(4.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(69,992
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,287
)
 
—

 
(113
)
 
(419
)
 
 
 
179

 
 
 
30

 
 
 
—

 
—

 
—

 
1,061

 
—

 
17,188

 
18,039

Utility and power plant projects
 
—

 
—

 
(40,085
)
 
—

 
 
 
—

 
 
 
4,128

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
4,128

Sale of operating lease assets
 
10,183

 
—

 
—

 
2,966

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
13

 
—

 
—

 
2,979

Sale-leaseback transactions
 
—

 
12,646

 
—

 
—

 
 
 
2,988

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
1,652

 
 
 
745

 
 
 
3,067

 
 
 
2,965

 
8,046

 
—

 
—

 
—

 
—

 
16,475

Other
 
—

 
—

 
—

 
(706
)
 
 
 
(262
)
 
 
 
(3,070
)
 
 
 
1,190

 
508

 
117

 
(12
)
 
—

 
—

 
(2,235
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(2,454
)
 
—

 
(2,454
)
Non-GAAP
 
$
186,611

 
$
110,492

 
$
104,693

 
$
42,249

 
22.6
%
 
$
11,973

 
10.8
%
 
$
(1,630
)
 
(1.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(30,072
)





 
 
April 3, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
151,807

 
$
52,241

 
$
180,827

 
$
33,647

 
22.2
%
 
$
7,015

 
13.4
%
 
$
10,875

 
6.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(85,409
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,312
)
 
—

 
(13,862
)
 
(485
)
 
 
 
—

 
 
 
(4,157
)
 
 
 
—

 
—

 
—

 
1,062

 
—

 
14,299

 
10,719

Utility and power plant projects
 
—

 
—

 
53,538

 
—

 
 
 
—

 
 
 
3,557

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
3,557

Sale of operating lease assets
 
10,403

 
—

 
—

 
3,112

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
8

 
—

 
—

 
3,120

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
827

 
 
 
652

 
 
 
2,646

 
 
 
3,032

 
9,363

 
—

 
—

 
—

 
—

 
16,520

Other
 
—

 
—

 
—

 
482

 
 
 
665

 
 
 
186

 
 
 
1,827

 
5,352

 
96

 
—

 
—

 
—

 
8,608

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
1,684

 
—

 
1,684

Non-GAAP
 
$
160,898

 
$
52,241

 
$
220,503

 
$
37,583

 
23.4
%
 
$
8,332

 
15.9
%
 
$
13,107

 
5.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(41,201
)





 
 
June 28, 2015
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
152,205

 
$
62,984

 
$
165,831

 
$
35,226

 
23.1
%
 
$
4,142

 
6.6
%
 
$
31,513

 
19.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
6,509

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
(4,688
)
 
—

 
—

 
(4,688
)
Utility and power plant projects
 
—

 
—

 
(4,313
)
 
—

 
 
 
—

 
 
 
(4,328
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(4,328
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
1,212

 
 
 
531

 
 
 
1,516

 
 
 
2,380

 
8,401

 
—

 
—

 
—

 
—

 
14,040

Other
 
—

 
—

 
—

 
(1,028
)
 
 
 
(657
)
 
 
 
(1,984
)
 
 
 
330

 
6,548

 
1,749

 
8,880

 
—

 
—

 
13,838

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
1,797

 
—

 
1,797

Non-GAAP
 
$
152,205

 
$
62,984

 
$
161,518

 
$
35,410

 
23.3
%
 
$
4,016

 
6.4
%
 
$
26,717

 
16.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
27,168






SIX MONTHS ENDED
 
 
July 3, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
329,522

 
$
150,087

 
$
325,718

 
$
72,403

 
22.0
%
 
$
15,338

 
10.2
%
 
$
5,090

 
1.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(155,401
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(2,599
)
 
—

 
(13,975
)
 
(904
)
 
 
 
179

 
 
 
(4,127
)
 
 
 
—

 
—

 
—

 
2,123

 
—

 
31,487

 
28,758

Utility and power plant projects
 
—

 
—

 
13,453

 
—

 
 
 
—

 
 
 
7,685

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
7,685

Sale of operating lease assets
 
20,586

 
—

 
—

 
6,078

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
21

 
—

 
—

 
6,099

Sale-leaseback transactions
 
—

 
12,646

 
—

 
—

 
 
 
2,988

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
2,479

 
 
 
1,397

 
 
 
5,713

 
 
 
5,997

 
17,409

 
—

 
—

 
—

 
—

 
32,995

Other
 
—

 
—

 
—

 
(224
)
 
 
 
403

 
 
 
(2,884
)
 
 
 
3,017

 
5,860

 
213

 
(12
)
 
—

 
—

 
6,373

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(770
)
 
—

 
(770
)
Non-GAAP
 
$
347,509

 
$
162,733

 
$
325,196

 
$
79,832

 
23.0
%
 
$
20,305

 
12.5
%
 
$
11,477

 
3.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(71,273
)





 
 
June 28, 2015
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
307,529

 
$
112,047

 
$
402,315

 
$
67,778

 
22.0
%
 
$
6,325

 
5.6
%
 
$
87,596

 
21.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(3,072
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
(4,688
)
 
—

 
—

 
(4,688
)
Utility and power plant projects
 
—

 
—

 
(14,583
)
 
—

 
 
 
—

 
 
 
(15,579
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(15,579
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
2,134

 
 
 
919

 
 
 
2,772

 
 
 
4,653

 
17,108

 
—

 
—

 
—

 
—

 
27,586

Other
 
—

 
—

 
—

 
776

 
 
 
(203
)
 
 
 
1,786

 
 
 
660

 
10,331

 
5,330

 
19,228

 
—

 
—

 
37,908

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
4,737

 
—

 
4,737

Non-GAAP
 
$
307,529

 
$
112,047

 
$
387,732

 
$
70,688

 
23.0
%
 
$
7,041

 
6.3
%
 
$
76,575

 
19.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
46,892




Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings